How To Get Good Investing Advice (Even If You're Not A Millionaire)

Do you ever feel “stuck” with your investment portfolio? The good news is, you’re not alone.

In fact, 34 percent of millennials say they don’t know how to invest—so they don’t. We can study until we’re blue in the face, but sometimes we either just don’t get investing or don’t really feel like trying to get it.

Enter investment advice. Traditional brokerage firms have been known to charge an arm and a leg to sit down with you face to face and provide sound, truthful financial management advice.

That is, until now.

In this article I’ll break down four up-and-coming investment companies that are now offering live investment management advice at a fraction of the cost of traditional advisors.

When should you get investment management advice?

Sometimes you won’t realize you need investment advice from a professional until it’s too late. David discussed this at length, but basically he feels there are three times in your life when you should probably look to a pro:

1. You feel “lost” in planning for your financial future and you need a roadmap.
2. You just don’t want to deal. When it comes to money, you’re not the DIY type, and you just want a professional to take care of it.
3. You like managing your money, but realize that your financial plan would benefit from an impartial and unemotional third-party opinion.

I couldn’t agree more. Whether you have no idea what you’re doing, or you have an idea but don’t want to bother with it – sitting down with someone licensed to give financial advice can be a good thing for your mind and your net worth.

If you’re still unsure, consider a more specific perspective. Kelly Campbell from U.S. News says there are five signs that you need a financial advisor:

1. You get a tax refund every single year
2. You have no clue what you’re paying for your investments
3. You’ve got no strategy for bear markets
4. You don’t know if you’re saving enough
5. You haven’t established a plan for when you die

Still very much in line with David’s theory, but on a more detailed level. The point is, you may need an advisor and not even know it. But the problem is, it’s expensive.

How much does investing advice typically cost?

Typically, getting help to manage your investments can be pretty expensive. Up until recently, you’d have to find a financial advisor, meet with them, hear their sales pitch, then decide if you want them to manage your money.

I came from this industry, and trust me, most advisors will do anything to get your business. I knew people in the field who would recommend investments to their clients just because it gave them a higher commission, not because it was best for the client.

But I digress…

At the end of the day, it’s just expensive. InvestmentNews did a study on the average costs of financial advice and found some pretty shocking statistics. Here’s a breakdown of the average fee you’ll pay a financial advisor, based on the size of your portfolio:

The way this works is a percentage (listed above) of the total amount you have invested with that firm. So if you have $5 million invested, you’d pay an annual fee of around 0.91%

In actual money terms, this equals $45,500 (5,000,000 x .0091).

You can see why so many people get into this business, especially when working with high net-worth clients. An advisor could potentially make $45,000 a year by managing just one $5 million dollar portfolio. Crazy.

What else do you notice about that list?

As the dollar amount you invest gets lower, you pay a higher fee. So if you’re a young professional still working to build your net worth, you might be lucky to have $100,000 to invest. Sadly, you’ll be giving away about $1,300 to a financial advisor just to give you advice each year.

We know financial advice is helpful, but traditionally, many have found it to be too expensive to be worth it. Now what?

Where can you get advice on investing for less?

You have two options: Get occasional advice from a financial advisor without handing over your portfolio to their control or get semi-personalized advice from any of a number of online investment companies, a.k.a. “roboadvisors” .

Financial advisors

I was just cautioning you about the high fees some financial advisors will charge to manage your investments for you. But you can get professional, one-on-one financial advice at a more reasonable cost if you find the right kind of financial advisor—mainly, a fee-only Certified Financial Planner.

The thing is, there are many different kinds of financial advisors. Most who are investment advisors either charge the high annual fees mentioned previously or earn commissions from the investment products they sell you. Neither situation is ideal.

But a third kind of advisor work differently. Rather than being investment specialists, most of these advisors or planners charge fees for services much like a lawyer or an accountant. For between several hundred and a couple thousand dollars you can sit down with an advisor and get a comprehensive financial plan which will include some general investing advice. Unlike investment managers, however, these advisors will not take over control of your portfolio—it’s still up to you to follow their advice and make the right investments.

Still, not everybody is ready to spend $1,000 or more with a financial advisor. That’s where roboadvisors and online advice come in. If you’re undecided, you can learn more about when it’s time to hire a financial advisor or how to find preselected fee-only financial advisors in your area.

Roboadvisors

Although one-on-one investment advice will always be expensive, you may consider purchasing a financial plan from a fee-only financial advisor. A good advisor isn’t cheap—expect to pay up to a couple thousand dollars for a comprehensive plan. But some advisors are willing to work with younger clients for less.

A few years ago, we saw roboadvisors shake up the investment industry by offering automated (and somewhat robotic) investment advice for anyone, all at a pretty low cost. Now they’re taking it a step further, offering actual live investment management advice for pretty much anyone. And you don’t have to have millions of dollars to get their attention.

Here are four of the most popular options, and a breakdown of each:

Betterment

What they offer:

• Live calls with a team of Certified Financial Planners (CFPs)
• Additional account monitoring

What it costs:

• 0.25 percent annually if you have at least $100,000 invested (Digital Investing)
• 0.40 percent annually if you have at least $250,000 invested (Premium Investing)

Account minimums:

• $100,000 if you want live advice (otherwise you’ll get the standard robo advisor)

The first thing you’ll probably notice is that as you invest more money, it actually costs more. What’s up with that? Well, the main difference between the two options Betterment has is in the amount of attention you’ll get.

Even if you qualify for a certain plan, you don’t have to take it. It just makes it available to you. Let’s break down Betterment’s options:

Digital plan

The standard plan that Betterment offers is for anyone and everyone. There’s no minimum account balance and you’ll pay a standard 0.25% annual fee, based on your balance. This pretty much just gives you the robo advisor, and if you’ve been a client of Betterment before, this is probably what you have.

Premium plan

The Premium Plan is the next tier in the live investment advice options. There are three differences between this plan and the Plus Plan:

1. You’ll pay 0.40% annually
2. You must invest at least $100,000
3. You get unlimited calls with Betterment’s team of CFPs

So you have to have $100,000 more and you’ll pay a slightly higher fee, but you get unlimited attention from a team of professionals. If you’re someone who likes to move money around, has frequent deposits, and plays with large balances, this is probably the option for you.

Betterment Advisor Network™

This option is for those who want dedicated, one-on-one investing advice. This mirrors going to see a financial advisor, so it’s going to be more expensive (Betterment does not give exact pricing) and you have to have at least $100,000 to invest. If you have a very large amount of money to invest, phone calls with teams of people doesn’t work for you, and you’re willing to pay more, you might want to check out this option.

Recommendation

If you have $100,000 to invest, you’re eligible for these services through Betterment. One cool thing is that it doesn’t all have to be in one account – it can be a combination of different accounts. That said, Betterment doesn’t charge you to cancel – so you may want to start with the Plus Plan to see if it works for you first.

Another thing to note is that even Betterment’s premium plans are still pretty hands off—you’re paying for advice and “additional account monitoring” but nothing more. If you want more hands on, check out FutureAdvisor below.

Learn more about Betterment in our review or open an account now.

FutureAdvisor

What they offer:

• Hands-on investment management
• Account monitoring by a professional
• Professional advice via chat, email, or phone
• Automatic rebalancing

What it costs:

• 0.50 percent annually

Account minimums:

• $10,000
• *Also you must have a Fidelity or TD Ameritrade account

FutureAdvisor is a little different than your average robo advisor. Unlike Betterment who is an actual brokerage firm, FutureAdvisor is in the business of giving you advice on managing the investments you already have with Fidelity or TD Ameritrade. Here’s a breakdown of FutureAdvisor’s two options:

Portfolio Analysis (Free)

FutureAdvisor offers a free portfolio analysis service to anyone who has a TD Ameritrade or Fidelity brokerage account. Once you sign up for an account, you’ll link your brokerage account to the FutureAdvisor dashboard. They’ll then analyze your portfolio and provide recommendations on how you should rebalance your investments.

You can get alerts when it’s time to rebalance, too, which is nice. You have to make the actual trades on your own, but this is a great service for people who are comfortable managing their investments, but want a second opinion. The catch is that nearly 40 percent of Fidelity 401(k) accounts are not eligible—they must be using the BrokerageLink system in order to connect to your account.

FutureAdvisor Premium

With FutureAdvisor Premium, you’ll pay an annual fee of 0.50 percent (based on your balance) and get access to FutureAdvisor’s team of licensed investment professionals. You can reach them via chat, phone, or email, and you also set up appointments to talk if it makes more sense for you.

While the majority of the analysis is done by the robo advisor, you’ll still have a human being watching over every trade you make. That and the live advice is what you’re really paying for. Much like their free portfolio analysis tool, you have to have an account with TD Ameritrade or Fidelity (which must be BrokerageLink ready) to participate. If you don’t, you’ll have to move your money to one of these brokerages in order to take advantage of FutureAdvisor’s services. You also have to have at least $10,000 in an account to be eligible—which is much lower than many competitors.

Recommendation

Where I see the most value is when you already have accounts with TD Ameritrade and Fidelity. If your accounts are eligible and you meet the minimum requirements, it can be worth the cost to get professional advice and management of your assets, especially because accounts like a 401(k) are typically self-managed.

One thing to note, though, is that you may incur fees for buying and selling funds through TD Ameritrade or Fidelity – though FutureAdvisor claims to try to use low cost options as often as possible (but this wouldn’t change if you were to manage the portfolio yourself anyway).

Vanguard

What they offer:

• Investment coaching (more hands-on)

What it costs:

• 0.30 percent annually

Account minimums:

• $50,000

Vanguard now offers a low-cost option for live investment advice. They do what they’re calling, investment coaching. It’s like a happy medium between a pure robo advisor and completely handing your finances over to someone to make all the decisions. This is a great option for those who know what they want to do, but want to talk through their ideas with someone and get sound advice.

Vanguard says their advisors add value in three ways:

1. Building your portfolio with low-cost funds (Vanguard has some of the cheapest funds available)
2. Serving as your investment coach
3. Minimizing your taxes

And their process of investment coaching has five steps:

1. A Vanguard advisor meets with you (over the phone) and gets to know you and your individual financial situation
2. They then partner with you to create a custom financial plan
3. They’ll put the plan into action for you, then manage it – you get to be as involved as you want
4. They’ll collaborate with you to keep you updated on your progress
5. They’ll rebalance your portfolio and work with you to revise the plan as needed

Overall, Vanguard takes a very hands-on approach. They only offer one “plan” so as long as you meet the minimum requirements ($50,000 to invest) you’re eligible.

Recommendation

Vanguard’s option is unique. While I’m sure there is some “robo-analysis” being done, you have the benefit of talking to, and getting to know, a real person. If you’ll find value in getting coaching instead of a full hands-off or hands-on approach, this is definitely the option for you. Plus, Vanguard rocks some pretty awesome funds.

Empower

What they offer:

• Investment management advice
• *More features are offered for high net-worth clients (see below)

What it costs:

• 0.89 percent annually (if investing under $1 million)

Account minimums:

• $0 – Basic Investment Service
• $200k – Wealth Management
• $1 million – Private Client

Empower is definitely targeting their business to clients with more money, but that doesn’t completely exclude those who don’t have a lot to invest. With that said, their fees are higher than any of the other options I’ve mentioned, and they don’t offer a lot more (at least at the lower levels) than companies like Betterment and FutureAdvisor.

With all three plans, you get live investment advice whenever you want it, tax optimization, and what they call, holistic financial planning – meaning they’ll consider investments you have outside of Empower as part of your overall financial picture (which feels somewhat obvious…). Here’s a breakdown of what you get with each of their three plans:

Investment Service

The investment Service plan is for those who have up to $200,000 to invest. You get access to Empower’s free online tools and dashboard, plus the following:

• Financial Advisory Team
• Tax Efficient ETF Portfolio
• Dynamic Tactical Weighting
• 401k Advice
• Cash Flow & Spending Insights

Wealth Management

You’ll need at least $200,000 to be eligible for this plan (but no more than $1 million). With the Wealth Management plan, you’ll get everything the Investment Service plan has, plus:

• Two Dedicated Financial Advisors
• Customizable Individual Stocks & ETFs
• Full Financial & Retirement Plan
• College Savings & 529 Planning
• Tax Loss Harvesting & Tax Location
• Financial Decisions Support (including Insurance, Home Financing, Stock Options and Compensation)

Private Client

To be a Private Client, you have to have at least $1 million in investable assets. Most people won’t qualify for this plan, but just for kicks I’ll break it down anyway. You get everything the Wealth Management plan has, plus:

• Priority Access to CFP, Advisors, Investment Committee & Support
• Investment Portfolio Mix of ETFs, Individual Stocks & Individual Bonds
• Family Tiered Billing
• Private Banking Services
• Estate, Tax & Legacy Portfolio Construction
• Donor Advised Funds
• Private Equity & Hedge Fund Review
• Deferred Compensation Strategy
• Estate Attorney & CPA Collaboration

Recommendation

Again, Empower is going after a very different demographic here. They offer their best services to those who invest $200,000 and above. Even then, you have to invest $1 million to get access to the top-tier benefits. I suppose it makes sense if you have that much to invest, but don’t forget you’re paying 0.89 percent with any account under $1 million—that’s very expensive. Unless you have a lot of money to invest, I personally wouldn’t recommend Empower’s investment advice services.

Read more about Empower in our review or open a free account now.

(Personal Capital is now Empower)
Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

Summary

Paying for investment advice from a professional isn’t something you should take lightly. Ultimately, it’s up to you whether or not you want to pay someone to give you advice on managing your money.

Whether you think you can handle your investments or not, I’d seriously consider looking into a robo advisor—with live advice or without. This way you’re always diversified and never have to worry about rebalancing. And if you decide to pay for advice, be comfortable with that decision and trust that adding real professional advice is a good thing for your future.

Read more:

• Are Roboadvisors Worth It?
• Roboadvisors Vs. Financial Advisors: Which Is Best For You?